Sustainable profitable growth 2020 and beyond Hans Van Bylen, - - PowerPoint PPT Presentation

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Sustainable profitable growth 2020 and beyond Hans Van Bylen, - - PowerPoint PPT Presentation

Henkel 2020 + Sustainable profitable growth 2020 and beyond Hans Van Bylen, Carsten Knobel Dsseldorf, January 21, 2019 Disclaimer This information contains forward-looking statements which are based on current estimates and assumptions made


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Henkel 2020+

Sustainable profitable growth 2020 and beyond

Hans Van Bylen, Carsten Knobel Düsseldorf, January 21, 2019

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2 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

This information contains forward-looking statements which are based on current estimates and assumptions made by the corporate management of Henkel AG & Co. KGaA. Statements with respect to the future are characterized by the use of words such as “expect”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, and similar terms. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and results actually achieved by Henkel AG & Co. KGaA and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward- looking statements. Many of these factors are outside Henkel’s control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. Henkel neither plans nor undertakes to update any forward-looking statements. This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Henkel’s net assets and financial positions or results of operations as presented in accordance with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently. This document has been issued for information purposes only and is not intended to constitute an investment advice or an offer to sell, or a solicitation of an offer to buy, any securities.

Disclaimer

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▪ Strong foundation with leading positions in key markets and categories ▪ Strong progress in the implementation of our strategic priorities ▪ Good performance in 2017 and 2018 despite significant headwinds ▪ Realize attractive opportunities to reinforce growth momentum ▪ Stepping up investments in brands & technologies, innovation and digitalization ▪ Committed to long-term sustainable value creation and attractive returns

21 January 2019 Henkel 2020+ Sustainable profitable growth - 2020 and beyond

Key points you will hear from us today

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4

  • 1. Henkel 2020+: Executing our strategy
  • 2. Realizing opportunities, strengthening growth
  • 3. Outlook and mid- to long-term ambition
  • 4. Summary and Q&A

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Agenda

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5 Henkel 2020+ Sustainable profitable growth - 2020 and beyond

Strong and consistent long-term performance

Step-change in sales and profitability

Attractive portfolio of three business units Sustainable and profitable growth path

▪ Strong operating performance, complemented by

compelling acquisitions

▪ Adhesive Technologies – global market leader

with scale and breadth

▪ Beauty Care – focused portfolio with core

competence in Hair Retail and Professional

▪ Laundry & Home Care – leading positions with

strong global and local brands

21 January 2019

15.1 15.6 16.5 16.4 16.4 18.1 18.7 20.0 12.3% 13.0% 14.1% 15.4% 15.8% 16.2% 16.9% 17.3% 2010 2011 2012 2013 2014 2015 2016 2017 Sales € bn Adj. EBIT %

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6 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

▪ Generate profitable growth and attractive returns ▪ Become more customer-focused, innovative and agile ▪ Lead digital transformation in all business activities ▪ Promote sustainability across the entire value chain ▪ Advance our portfolio with value-adding acquisitions

Henkel 2020+

Executing our strategy

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Henkel 2020+

Continued strong progress in the implementation of our strategic priorities

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

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1 rounded, at constant currencies

Good development despite significant headwinds

Preliminary results 2018

▪ Good organic sales growth, driven by strong performance of Adhesive Technologies ▪ North American consumer goods businesses negatively affected by delivery difficulties ▪ Substantial FX headwinds impacting top line (amounting to around 1.1 billion euros) and bottom line ▪ Improvement in Adjusted EBIT Margin by 30 bps supported by Fund Growth initiatives and synergies ▪ Adjusted EPS above previous year, up by around 7% excluding FX effects

21 January 2019

€ 19.9 bn +2.4%

Sales Organic Growth

€ 3.5 bn 17.6%

Adjusted EBIT Adjusted EBIT %

+2.7% (+7%1)

Adjusted EPS Growth

Henkel 2020+ Sustainable profitable growth - 2020 and beyond

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Good progress on financial ambition

Substantial volatility and magnitude of currency headwinds

Ambition 2020 Status 2017-18

Organic Sales Growth 2 - 4%

(Average 2017 – 2020)

+2.7%

(Average 2017 – 2018)

Adjusted EPS Growth 7 - 9%

(CAGR 2016 - 2020, per preferred share)

+5.9% (around +9% FX-adjusted)

(CAGR 2016 - 2018)

Adjusted EBIT Margin Continued improvement in Adjusted EBIT Margin Continued increase by 40 bps in 2017 and by 30 bps in 2018 Free Cash Flow Continued focus on free cash flow expansion Increase to ≥ € 1.8 bn in 2018

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

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  • 1. Henkel 2020+: Executing our strategy
  • 2. Realizing opportunities, strengthening growth
  • 3. Outlook and mid- to long-term ambition
  • 4. Summary and Q&A

Agenda

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

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Realizing opportunities, strengthening growth

Step up investments in brands & technologies, innovation and digitalization

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

▪ Outperform by leveraging scale and breadth of the Adhesive Technologies portfolio ▪ Accelerate growth in Beauty Care Retail, continue momentum in Professional ▪ Win market shares and execute innovation strategy in Laundry & Home Care ▪ Advance to next level of digitalization

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Adhesive Technologies

Well positioned to deliver sustainable profitable growth in a challenging environment

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

▪ Global market leader with scale and breadth

Strong portfolio with leading positions across industries, regions and technologies Proven track record to adapt resource allocation to capture best opportunities

▪ Attractive business model

Superior value to our customers through high-impact solutions High-touch business model, driven by customer insights and deep technology/application expertise

▪ Creating value through transformative solutions

Capture growth by leveraging megatrends such as connectivity, eMobility or sustainability Unique, scalable platform to expand into new segments

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13 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Leveraging growth opportunities

Creating value with transformative solutions

▪ Expand positions in Growth Markets & Technologies

Drive emerging applications in lightweight and electrification Continue bolt-on acquisitions of selected new technologies

▪ Capture full innovation potential

Unmatched knowledge, co-creating innovations with market leaders Leveraging state-of-the-art innovation centers & broad network of experts

▪ Create unique digital customer experience

Developing integrated data foundation to better serve our customers Expand customer base through digital demand generation and conversion

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14 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Beauty Care

Growth opportunities in both Retail and Professional

▪ Strong brand portfolio with key competence in Hair

Compelling portfolio of global and local brands, delivering structurally high gross margins Retail with strong performance in Coloration & Styling, continuously strong momentum in Professional

▪ Weakened growth in Beauty Care Retail

Volume-driven category Hair Care especially affected by intense price and promotion pressure North America Retail with challenges in Body Care

▪ Attractive growth opportunities

Strong underlying growth trends such as naturality and new emerging consumer groups eCommerce revenues increasing double-digit

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15 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Drive superior growth in Hair

Holistic innovation plan across all Hair segments

▪ Complete relaunch of hair care portfolio

Trend-based innovations on Gliss and Syoss, linking nature & performance Holistic relaunch of family brand Schauma with vegan formulas

▪ Accelerate strong growth momentum in hair coloration

Launch of complementary brand OnlyLove, addressing “free-from” trend Strong product innovations on Palette, leveraging fashion trends

▪ Boost success of leading styling brands

taft tackling “natural looking” trend with Casual Chic innovation Relaunch and expansion of millennials mega brand got2b

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Back to growth in North America

Targeted growth plan with strong initiatives

▪ Build on strong brand equity of Dial

Extend body wash with Silk Moisture offering Leverage “Healthier skin, healthier us” equity with Dial Complete subline

▪ Expand in attractive hair coloration category

Relaunch and expand Color Ultime’s premium trend color portfolio Launch new Keratin Color variants

▪ Accelerate success of got2b across categories

Further expand got2b trend color offerings Expand PHENOMENAL male line in hair care

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17 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Continue to outperform in Professional

Sustain very strong growth momentum

▪ Strengthen profitable organic growth

Roll-out new Professional brands outside North America Enter additional distribution channels to drive growth

▪ New state-of-the-art interactive B2B ePlatform

Drive sales via speed, convenience and end-to-end customer experiences Ensure better customer service, solutions and 1:1 relationships

▪ Innovation offensive in all categories

Launch high potential color and care initiatives under Schwarzkopf Expand with strong Bonacure and Joico hair care offensive

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18 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Laundry & Home Care

Strong growth potential driven by leading brand portfolio and technologies

▪ Leading market positions with global & local brands

Unique coverage of Laundry & Home Care market leading with more than 70 #1 positions Attractive combination of global megabrands like Persil and local jewels

▪ Good but lower growth dynamics

Strong momentum in premium detergents, toilet care and auto dishwashing North America Retail with negative organic sales growth and lower market share level Value-for-money laundry under price and promotion pressure

▪ Attractive growth opportunities

Position in fast growing single-unit dose segment to be strengthened Strong underlying growth trends such as naturality / convenience and growing importance of eCommerce Further potential to expand high-margin Home Care business driven by strong brand portfolio and innovations

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19 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

▪ Full-scale omni-channel Persil relaunch

Global relaunch with new “deep clean“ concept and formula Hyper-concentrated formulas and fully eCommerce-ready packaging

▪ New premium technologies

First-to-market 4-chamber disc in fast growing caps segment New breakthrough variants with new technology fighting malodor

▪ Full global relaunch of value-for-money brands

Relaunch with unique +50% freshness formula Line extensions with exclusive perfume technologies

Relaunch of megabrand Persil

Introducing superior formulas and convenience

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▪ Reinventing ‘all with its unique free and clear positioning

Complete relaunch of ‘all product portfolio across categories leveraging our global technology expertise

▪ Win in the strongly growing caps segment

Launch of innovative Persil ProClean Disc Expansion in value-for-money caps with Purex 4-in-1

▪ Expanding leading fabric finisher brand Snuggle

Entrance into premium fragrance segments with new “Snuggle Scent Shakes” offering unparalleled scent experience

Turn around North America

Relaunch of entire portfolio and strong innovations for new growth momentum

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▪ Superior performance in dishwashing

Relaunch of full Somat product range with new tabs and gel generations New Pril pearls innovation in hand dishwashing anti-grease

▪ Expand successful offering in toilet care

Accelerate global success of toilet rimblocks with new deluxe scent

▪ Fully capture Health and Sustainability trends

Launch of new green products with eco-certified formulas and sustainable plastic strategy

Expand Home Care to strengthen profitable growth

Leveraging blockbuster brands and key trends

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22 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

▪ Driving digital sales and new business models

Strong development of eFormats and specific offers to boost digital sales Develop new digital services and products, implement IoT strategy

▪ Advance digital customer & consumer interaction

Rapid expansion of digital analytics, eCRM and eShopper category mgmt Dedicated in-house social media team & content factory

▪ Leveraging Industry 4.0

Real-time leverage of automation and robotics, sensorics and analytics

▪ Digital infrastructure

Set-up of new digital workspaces and investments in cyber security, upgrade of network capacity and site infrastructure

Advance to next level of digitalization

Significant expansion of investments in digital businesses, analytics & infrastructure

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▪ Sustainably higher growth investments ▪ Accelerating top-line growth with focus

  • n consumer goods business

▪ Step-up of investments in digitalization

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

€ 300 million higher investments

in brands & technologies, innovation and digitalization

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  • 1. Henkel 2020+: Executing our strategy
  • 2. Realizing opportunities, strengthening growth
  • 3. Outlook and mid- to long-term ambition
  • 4. Summary and Q&A

Agenda

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

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25 21 January 2019 Henkel 2020+ Sustainable profitable growth - 2020 and beyond

Current market environment

Mixed market dynamics with headwinds from currencies and commodities

Lower currency headwinds, though still negatively affecting top and bottom line

Devaluating EM currencies

High volatility and uncertainty on commodity markets with ongoing cost pressure

Pressure from Direct Material prices

Slowing growth momentum, but still good growth of IPX

Industrial Production

Persisting difficult conditions and

  • ngoing competitive/pricing pressures

Mixed HPC markets

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▪ Continue momentum of Adhesive Technologies in a lower growth environment ▪ Execute strong innovation strategy with higher investments in Consumer Goods businesses ▪ Advance to next level of digitalization ▪ Continue our strong focus on cost discipline, drive efficiency and adapt structures ▪ Strong focus on Working Capital improvement and Free Cash Flow expansion ▪ Enhance value proposition of portfolio organically and via acquisitions

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Business Priorities 2019

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Guidance 2019

21 January 2019 Henkel 2020+ Sustainable profitable growth - 2020 and beyond

FY 2019

Organic Sales Growth 2 - 4% Adjusted EBIT Margin 16 - 17% Adjusted EPS Mid single digit % below PY

(constant currencies)

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28 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

▪ Generate profitable growth and attractive returns ▪ Become more customer-focused, innovative and agile ▪ Lead digital transformation in all business activities ▪ Promote sustainability across the entire value chain ▪ Advance our portfolio with value-adding acquisitions

Committed to execute our strategy

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29 Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

Mid- to long-term financial ambition

Committed to sustainable profitable growth

▪ Achieve organic sales growth of 2-4% ▪ Deliver mid to high single-digit % adjusted EPS growth at constant currencies ▪ Continued focus on Free Cash Flow expansion ▪ Pursue compelling growth opportunities with superior execution ▪ Maintain rigorous cost discipline and focus on margin

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▪ Continue implementation of comprehensive CapEx investments ▪ M&A as integral part of Henkel‘s strategy ▪ Target dividend payout range increase from 25 - 35% to 30 - 40%

Consistent capital allocation supporting our ambition

Excellent Free Cash Flow and strong Balance Sheet

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  • 1. Henkel 2020+: Executing our strategy
  • 2. Realizing opportunities, strengthening growth
  • 3. Outlook and mid- to long-term ambition

4.

  • 4. Summary and Q&A

Agenda

Henkel 2020+ Sustainable profitable growth - 2020 and beyond 21 January 2019

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Key take-aways

▪ Implementation of Henkel 2020+ well under way ▪ Preliminary results 2018: Good performance despite significant headwinds ▪ Stepping up investments in brands & technologies, innovation and digitalization ▪ Outlook for 2019 reflecting higher growth investments while maintaining high cost discipline ▪ Mid- to long-term financial ambition for 2020 and beyond reinforcing commitment to delivering sustainable profitable growth ▪ Increased target dividend payout range

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▪ Strong foundation with leading positions in key markets and categories ▪ Strong progress in the implementation of our strategic priorities ▪ Good performance in 2017 and 2018 despite significant headwinds ▪ Realize attractive opportunities to reinforce growth momentum ▪ Stepping up investments in brands & technologies, innovation and digitalization ▪ Committed to long-term sustainable value creation and attractive returns

21 January 2019 Henkel 2020+ Sustainable profitable growth - 2020 and beyond

Key points you heard from us today

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Back-up

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1 versus the prior year

FY 2019: Additional input for selected KPIs

Organic Sales Growth by Business Unit All Business Units within Group range of 2 - 4% Adjusted EBIT Margin by Business Unit Adhesive Technologies: 18 - 19% Beauty Care: 15 - 16% Laundry & Home Care: 16.5 - 17.5% Currency Impact on Sales Low single digit % negative1 Prices for Direct Materials Low single digit % increase1 Restructuring Charges € 200 - 250 m CapEx € 750 - 850 m

Henkel 2020+ Sustainable profitable growth - 2020 and beyond January 2019 21 January 2019

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  • Adj. EBIT Margin in %

+20 bps

x1 x2 18.5 18.7 2017 2018

21 January 2019

Adhesive Technologies

Key Financials FY 2018 (preliminary)

Sales in €bn, OSG in % +4.0%

x1 x2 9.4 9.4 2017 2018

Henkel 2020+ Sustainable profitable growth - 2020 and beyond

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37 21 January 2019

Beauty Care

Key Financials FY 2018 (preliminary)

  • 0.7%

x1 x2 3.9 3.9 2017 2018

Sales in €bn, OSG in %

  • 10 bps

x1 x2 17.2 17.1 2017 2018

  • Adj. EBIT Margin in %

Henkel 2020+ Sustainable profitable growth - 2020 and beyond

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Laundry & Home Care

Key Financials FY 2018 (preliminary)

+1.9%

x1 x2 6.7 6.4 2017 2018

Sales in €bn, OSG in % +50 bps

x1 x2 17.6 18.1 2017 2018

  • Adj. EBIT Margin in %

Henkel 2020+ Sustainable profitable growth - 2020 and beyond